Glossary
Staking
Staking is the practice of locking up cryptocurrency to help secure a proof-of-stake blockchain, and in return receiving newly issued rewards for supporting the network. It turns holdings into an active part of a network's consensus rather than a passive balance.
The close-up. On a proof-of-stake network, participants commit their coins as collateral to validate transactions and add new blocks. A committed stake gives a validator the right to propose and confirm blocks, and honest work earns protocol rewards. If a validator acts dishonestly or goes offline, part of its stake can be removed through a penalty known as slashing. Because running a validator has technical requirements, many holders instead delegate their coins to an existing validator, or use pooled and exchange-based services, while the underlying assets continue backing the network.
The wide shot. Staking is how proof-of-stake replaces the energy-intensive competition of mining with an economic one: security comes from having value at risk rather than from expending electricity. Stakes are often subject to a lock-up or unbonding period, so coins cannot always be moved instantly. Rewards, penalties, and withdrawal rules differ by protocol and by service, and staked assets remain exposed to market movement and to the behavior of any third party involved.
Staking is a way to participate in consensus, not a guaranteed return. Terms and risks vary widely, so read the specific protocol's documentation and do your own research before committing any assets.